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Latin America Weekly Market Economics Summary - 05 - 09 March 2018

Core Content Overview

This document outlines key economic events and outlooks for Latin American countries during the week of 05–09 March 2018, focusing on inflation, growth, and political developments. It provides forecasts, analysis, and commentary from BNP Paribas on economic indicators and market implications.

Key Events and Analysis

Brazil

• Inflation: February IPCA inflation is expected to remain soft at 2.86% y/y, slightly below the target range. Monthly inflation is forecast at 0.34% m/m, with a seasonal tuition fee likely to drive the increase.
• Industrial Production: A likely temporary monthly contraction in January industrial production is expected, but annual growth could accelerate to 5.9% y/y due to a base effect.
• Economic Outlook: Private consumption is leading the growth, supported by lower interest rates, reduced family debt, and improved labor market conditions.
• Other Releases:
  • Trade balance for February is expected at USD6.2bn.
  • Vehicle production and sales data for February will be released.
  • The FGV CPI IPC-S and IGP-M are scheduled for release, with the first preview for March.

Mexico

• NAFTA Talks: The seventh round of NAFTA renegotiations concludes on Monday, with a joint statement expected to signal progress or setbacks.
• Inflation: CPI is forecast to moderate to 5.4% y/y for February, with core inflation expected to decelerate to 4.27% y/y. Non-core and core subgroups are expected to show softer pressure.
• Investment: Gross fixed investments are forecast to grow slightly at 0.5% y/y in December, but the Q4 average is expected to remain negative at -2.3% y/y.
• Economic Outlook: Despite uncertainties, the economy is expected to perform better in 2018 than in 2017. The Q4 inflation report suggested a delayed convergence to the central target.

Colombia

• Inflation: CPI is expected to decelerate to 3.4% y/y in February, with core inflation dropping by 40bp to below 4.2% y/y.
• Political Developments: Congressional elections are scheduled for Sunday, 11 March, with market-friendly candidates expected to gain traction. The outcome could influence policy direction.
• Economic Outlook: The political climate is likely to impact investor sentiment and policy decisions.

Chile

• Growth and Inflation: Stronger growth and stable inflation are expected. January GDP growth is forecast at 3.1% y/y, with the 3m moving average improving to 3%.
• Economic Releases: The central bank will release the January inflation report, with CPI expected to rise 0.2% m/m and remain at 2.2% y/y.
• Other Indicators: Business confidence and nominal wage growth for January are also expected to be released.

Argentina

• Auto Sector Report: The February auto sector report will be the main focus, highlighting domestic sales, production, and exports.
• Economic Outlook: A cautious approach is advised due to the variability of plant retooling periods. Export performance is expected to reflect the state of Brazil's economy.

Summary of Main Economic Indicators

Conclusion

The week ahead in Latin America will be marked by key inflation and growth data releases, with NAFTA negotiations and political elections playing a central role in shaping market sentiment. Brazil and Mexico are expected to see continued disinflationary trends, while Chile shows signs of stronger economic activity. Argentina's auto sector report will provide insights into broader economic performance. Overall, the outlook remains cautiously optimistic, with growth supported by improved consumer and business conditions, but inflation and political uncertainty continue to pose challenges.